JK Paper investment creates market buzz

JK Paper has secured board approval for the purchase of Manipal Utility Packaging Solutions (MUPSPL) at a cost of Rs 88.7 crore. The acquisition which is slated for completion within six weeks following the signing of the Share Purchase Agreement (SPA) is creating a buzz in the market.

19 Oct 2023 | By Aditya Ghosalkar

JK Paper approved acquisition of Manipal Utility Packaging Solutions for cash consideration of Rs 88.73-crore

One of the largest Indian paper manufacturing companies in India, JK Paper commissioned production at its packaging board plant in Gujarat in January 2022. Built with a Rs 14.5 billion investment, the plant was to upscale the company’s annual capacity from 4.5 lakh tonnes to 6.25 lakh tonnes. Since then, JK Paper has aimed to establish a foothold in the packaging board segment.

AIM Investments said, "With JK Paper's acquisition of Manipal Utility Packaging Solutions, it’s moving from only paper to a packaging and paper company". Another investor tweeted, "JK Paper has been able to turnaround Sirpur paper mills successfully."

The stick market analysts have responded to the development with company fundamentals are above average; above 410 upside targets can be seen.

JK Paper has made a share purchase agreement for the acquisition of 100% shares of MUPSPL. JK Paper will acquire 4.07cr equity shares of MUPSPL at Rs 21.80 / share at Rs 10 each.

MUPSPL has a revenue of Rs. 148-crore in FY 2022-23. MUPSPL  is a 100% subsidiary of Manipal Technologies (MTL). The company is engaged in the business of manufacturing packaging products like folding cartons, corrugated boxes and labels with four manufacturing plants across India.

JK acquired 85% stake in two corrugated packaging firms. Readers of PrintWeek and WhatPackaging? will recall that JK Paper announced its acquisition plan for Horizon Packs (HPPL) and Securipax Packaging (SPPL) for about Rs 578-crore in November 2022.

The company is set to bolster its presence in the packaging market by purchasing Rs 4.07 crore equity shares, which represent the entire capital of Manipal Utility Packaging Solutions (MUPSPL). The acquisition will be made at a price of Rs 21.80 per equity share with a face value of Rs 10 each, and any necessary adjustments will be carried out as specified in the agreement.

Harsh Pati Singhania, the vice chairman and managing director, JK Paper said, "This acquisition is in line with the long term strategic. goals." He added, "The acquisition gives us an opportunity to offer combined solution to the customers with respect to secondary and tertiary packaging, improve operational efficiencies, and ensure that MUPSPL grows and adds value to stakeholders."

According to Mordor Intelligence, the packaging market size, estimated at USD 71.90 billion in 2023, is expected to reach USD 130.14 billion by 2028, registering a compound annual growth rate (CAGR) of 12.60% during the forecast period.

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